Chapter X  Securities Service Providers 

Article 160 Accounting firms, law firms, and other securities service providers engaged in securities investment consulting, asset appraisal, credit rating, financial consulting and information technology system services shall be diligent and dutiful and provide services for securities transactions and related activities in accordance with the relevant business rules. 

Securities investment consultancy services shall be subject to the examination and approval of the securities regulatory authority under the State Council. Without examination and approval, no one shall provide services for securities transactions and other related activities. One who intends to engage in any other securities transaction service shall file the matter for the record with the securities regulatory authority under the State Council and the relevant authorities under the State Council. 

Article 161 An investment consulting institution and its practitioners engaged in securities transaction services shall not have the following acts: 

(1) Engaged in securities investment as an agent for its customers; 

(2) Entering into an agreement with its customers on sharing the profits or losses of securities investment; 

(3) Purchasing or selling the securities to which the investment consulting institution provides services; or 

(4) Other acts prohibited by laws and administrative regulations. 

Where any of the acts set out in the preceding paragraph causes losses to investors, the responsible party shall bear compensatory liability. 

Article 162 A securities service institution shall properly preserve customers' entrustment documents, examination and verification materials, work papers as well as the information and materials related to quality control, internal management and business operation. No one shall divulge, conceal, forge, alter or damage such information and materials. The aforesaid information and materials shall be retained for no less than 10 years starting from the date when the entrustment is concluded. 

Article 163 Where a securities service provider prepares and issues any auditing report and other assurance report, asset appraisal report, financial consultancy report, credit rating report or legal opinion for the purpose of issuing, listing and trading of securities, it shall act with due care and diligence, and shall examine and verify the truthfulness, accuracy and completeness of the contents of the documents to be based on. Where there is any false record, misleading representation or major omission in the documents that the institution has prepared or issued and losses have been caused to other persons, the institution shall bear several and joint liabilities together with the entrusting party, unless the institution could prove that it is not at fault. 

Chapter XI Securities Association 

Article 164 The securities association is a self-regulatory organization for the securities industry and is a social organization legal person. 

Securities companies shall join the securities association. 

The authority of the securities association is the general meeting composed of all of its members. 

Article 165 The articles of association of the securities association shall be formulated by the general meeting and shall be filed for the record with the securities regulatory authority under the State Council. 

Article 166 The securities association shall perform the following duties: 

(1) Educating and organizing its members and their practitioners to observe securities laws and administrative regulations, organizing the integrity building of the securities industry and urging the securities industry to perform its social responsibilities; 

(2) Safeguarding the legitimate rights and interests of its members and reporting the suggestions and demands of its members to the securities regulatory authority; 

(3) Urging its members to carry out investor education and protection activities to safeguard the legitimate rights and interests of investors; 

(4) Formulating and implementing the self-regulatory rules of the securities industry, supervising and inspecting the conduct of its members and their practitioners and imposing disciplinary sanctions or other self-regulatory measures according to the regulations against violations of laws, administrative regulations, self-regulatory rules or the articles of association; 

(5) Formulating business standards of the securities industry and organizing professional trainings for the practitioners; 

(6) Organizing its members to conduct research on the development, operation and other issues of the securities industry, collecting and publicizing information related to securities, providing member services, organizing industry exchanges and guiding the innovation and development of the industry; 

(7) Mediating securities-related disputes arising between members or between members and their customers; and 

(8) Performing other duties as specified by the articles of association. 

Article 167 The securities association shall establish a council. The members of council shall be elected pursuant to the provisions of the articles of association. 

Chapter XII Securities Regulatory Authority 

Article 168 The securities regulatory authority under the State Council shall supervise and administrate the securities market according to law, maintain the openness, fairness and equitability of the securities market, guard against systematic risks, safeguard the legitimate rights and interests of investors and promote the sound development of the securities market. 

Article 169 The securities regulatory authority under the State Council shall perform the following duties in the course of supervising and administrating the securities market: 

(1) Formulating rules and regulations on supervision and administration of the securities market according to law and conducting examination and approval, ratification, registrations, and handling filing procedures according to law; 

(2) Conducting supervision and administration of securities issuance, listing, trading, registration, deposit, and settlement according to law; 

(3) Conducting, according to law, supervision and administration of securities-related activities of securities issuers, securities companies, securities service institutions, securities trading sites, securities registration and clearing institutions; 

(4) Formulating the code of conduct for securities practitioners according to law and supervising the implementation of the code; 

(5) Conducing supervision and examination of information disclosure regarding the issuance, listing and trading of securities; 

(6) Providing guidance for and conducting supervision of the self-regulatory activities of the securities association according to law; 

(7) Monitoring, preventing and handling risks in the securities market according to law; 

(8) Carrying out investor education according to law; 

(9) Investigating and punishing violations of the securities laws according to law; and 

(10) Other duties provided for by laws and administrative regulations. 

Article 170 The securities regulatory authority under the State Council shall perform its duties according to law and shall have the authority to take the following measures: 

(1) Carrying out on-site inspections to securities issuers, securities companies, securities service institutions, securities trading venues and securities registration and clearing institutions; 

(2) Entering the site where a suspected illegal act occurs to investigate and collect evidence; 

(3) Inquiring the parties concerned and the entities and individuals relating to a case under investigation and requiring them to make explanations on the matters relating to the case under investigation; or requiring them to submit the documents and materials relating to the case under investigation in the prescribed manner; 

(4) Inspecting and copying documents and materials such as the registration of property right and the communication records relating to the case under investigation; 

(5) Inspecting and copying the securities transaction records, transfer records, financial statements as well as other relevant documents and materials of the entities or individuals relating to the case under investigation; sealing or seizing the documents or materials that are likely to be transferred, concealed or damaged; 

(6) Inquiring the information on the brokerage accounts, securities accounts and bank accounts as well as other accounts with the functions of payment, custody and settlement of the parties concerned and the entities or individuals relating to the case under investigation, and duplicating the relevant documents and materials. Where there is evidence that the property involved in the case such as illegal funds and securities have been or may be transferred or concealed, or that important evidence has been concealed, forged or damaged, such property or evidence may be frozen or sealed for a period of six months upon approval of the principal of the securities regulatory authority under the State Council or other responsible persons with the authorization of the principal. Where it is necessary to extend the period for any special reason, each extension shall not exceed three months and the maximum period for freezing or sealing property shall not be more than two years; 

(7) In the investigation of a major violation of the securities laws such as manipulation of the securities market or insider trading, upon approval of the principal of the securities regulatory authority under the State Council or other responsible persons with the authorization of the principal, restriction may be placed on the securities transactions of the party under investigation, the period of restriction shall not exceed three months; and such period may be extended by three months if the case is complicated; 

(8) Notifying the Exit and Entry Administration to prevent persons suspected of violating laws, persons in charge of entities suspected of violating laws and other persons directly responsible from leaving the country. 

In order to control the securities market risks and maintain market order, the securities regulatory authority under the State Council may take such measures as ordering to take corrective measures, regulatory talks and imposition of warnings. 

Article 171 During the course of an investigation by the securities regulatory authority of the State Council on an entity or individual suspected of violating the securities laws, where the party under investigation submits a written application to the securities regulatory authority of the State Council undertaking to rectify the alleged violations, compensate the relevant investors for losses and eliminate the damages or adverse effects in the time limit determined by the securities regulatory authority of the State Council, the securities regulatory authority of the State Council may decide to suspend the investigation. Where the party under investigation has performed its undertaking, the securities regulatory authority of the State Council may decide to terminate the investigation. Where the party under investigation has failed to perform its undertaking or falls under other circumstances specified by the State Council, the investigation shall be resumed. Specific measures to this end shall be formulated by the State Council. 

Where the securities regulatory department under the State Council decides to suspend or terminate an investigation, it shall publicize the relevant information according to regulations. 

Article 172 For performing the duties of supervision, inspection or investigation of the securities regulatory authority of the State Council according to law, the number of personnel conducting the supervision, inspection or investigation shall not be less than two. The personnel shall show their legal certificates and the notice of supervision, inspection or investigation or other enforcement documents. Where the number of personnel conducting supervision, inspection or investigation is less than two or the personnel fails to show their legal certificates or the notice of supervision, inspection or investigation or other enforcement documents, the entity or individual under inspection or investigation shall have the right to refuse the inspection or investigation. 

Article 173 When the securities regulatory authority under the State Council performs its duties according to law, the entity or individual under inspection or investigation shall cooperate and provide the relevant documents and materials in a faithful manner and shall not refuse or obstruct the investigation or conceal relevant facts. 

Article 174 The regulations, rules, and supervision and administration system formulated by the securities regulatory authority under the State Council shall be publicized according to law. 

The penalty decisions of the securities regulatory authority under the State Council against violations of the securities laws made on the basis of investigation results shall be publicized. 

Article 175 The securities regulatory authority under the State Council shall establish an information sharing mechanism for supervision and administration in collaboration with other financial supervisory and regulatory authorities under the State Council. 

Where the securities regulatory authority under the State Council performs its duties of supervision, inspection or investigation according to law, the relevant departments shall cooperate. 

Article 176 Any entity or individual shall have the right to report any alleged violations of the securities laws and regulations to the securities regulatory authority under the State Council. 

Where the clues of alleged major violations of laws or regulations reported in real name have been verified, the securities regulatory authority under the State Council shall reward the informer according to regulations. 

The securities regulatory authority under the State Council shall keep the identity of the informer confidential. 

Article 177 The securities regulatory authority of the State Council may establish supervision and administration cooperative mechanisms with the securities regulatory authorities of other countries or regions with a view to implementing cross-border supervision and administration. 

The securities regulatory authorities of other countries or regions shall not directly carry out investigation and evidence collection within the territory of the People's Republic of China. Without the consent of the securities regulatory authority under the State Council and the relevant authorities under the State Council, no entity or individual shall provide documents or materials related to securities business activities to other countries or regions without authorization. 

Article 178 Where the securities regulatory authority under the State Council in performing its duties according to law, finds that a violation of securities laws may constitute a crime, it shall transfer the case to the judicial organ according to law. Where it is found that any functionary is suspected of violating laws or committing crimes by taking advantage of his position, he shall be transferred to a supervisory organ according to law. 

Article 179 The functionaries of the securities regulatory authority of the State Council shall be devoted to their duties, act impartially and honestly according to law, and shall not take advantage of their positions to seek illegitimate interests or divulge any commercial secret of the relevant entities or individuals which has come to their knowledge. 

The functionaries of the securities regulatory institution of the State Council, during their term of office or within the time limit specified by the Law of the People's Republic of China on Civil Servants after leaving office, shall not hold a position in an enterprise or other profit-making organization which has a direct relation to their original work, and shall not engage in profit-making activities which have direct relations to their original work. 

Chapter XIII Legal Liability 

Article 180 Where any company, in violation of the provisions of Article 9 of this Law, publicly issues securities without authorization or in a disguised form, it shall be ordered to cease the issuance, return the funds raised and the interest calculated at the bank deposit interest rate for the same period, and be imposed a fine of not less than 5% but not more than 50% of the funds illegally raised. Any company established through public offering of securities without authorization or in a disguised form shall be banned by the organ or department that performs the duties of supervision and administration according to law in collaboration with the local people's government at or above the county level. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB500,000 but not more than RMB 5 million. 

Article 181 Where an issuer conceals important facts or fabricates major false contents in the securities issuance documents announced, it shall be imposed a fine of not less than RMB 2 million but not more than RMB 20 million if the securities have not yet been issued, or a fine of not less than 10% but not more than 100% of the funds illegally raised if the securities have already been issued. The person-in-charge directly responsible and other persons directly responsible shall be imposed a fine of not less than RMB 1 million but not more than RMB 10 million. 

Where a controlling shareholder or the actual controller of an issuer organizes or instructs others to commit any of the illegal acts prescribed in the preceding paragraph, the illegal gains shall be confiscated and a fine of not less than 10% but not more than 100% of the illegal gains shall be imposed. If there are no illegal gains or the illegal gains are less than RMB 20 million, a fine of not less than RMB 2 million but not more than RMB 20 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be imposed a fine of not less than RMB 1 million but not more than RMB 10 million. 

Article 182 Where a sponsor issues a sponsorship letter containing false record, misleading representation or major omission, or fails to perform other statutory duties, the sponsor shall be ordered to take corrective measures and be given a warning. The business income of the sponsor shall be confiscated and a fine of not less than one time but not more than ten times the value of the business income shall be imposed. If there is no business income or the business income is less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. If the circumstances are serious, the sponsor's permit shall be suspended or revoked concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. 

Article 183 Where a securities company underwrites or sells securities which are publicly issued without authorization or in a disguised form, it shall be ordered to terminate the underwriting or sale. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. If the circumstances are serious, the relevant permit shall be suspended or revoked concurrently. Where losses have been caused to investors, the company shall bear several and joint liability for compensation together with the issuer. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. 

Article 184 Where a securities company engaged in securities underwriting violates the provisions of Article 29, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than RMB 500,000 but not more than RMB 5 million may be imposed concurrently. If the circumstances are serious, the relevant business licenses shall be suspended or revoked. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and may be imposed a fine of not less than RMB 200,000 but not more than RMB 2 million concurrently. If the circumstances are serious, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed concurrently. 

Article 185 Where an issuer, in violation of the provisions of Article 14 or 15, changes the purpose of the funds raised through public offering of securities without authorization, it shall be ordered to take corrective measures and be imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. 

Where a controlling shareholder or the actual controller of an issuer commits, or organizes or instructs others to commit the illegal acts prescribed in the preceding paragraph, a warning shall be given and a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. 

Article 186 Where anyone transfers securities within the restricted period in violation of the provisions of Article 36 of this Law or transfers stocks in violation of the provisions of laws, administrative regulations or the regulations of the securities regulatory authority under the State Council, he shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not more than the value of the securities shall be imposed. 

Article 187 Where anyone who is prohibited by laws and administrative regulations from engaging in securities transaction directly or in an assumed name or in the name of other persons holds or purchases or sells stocks or other securities with the nature of equity in violation of the provisions of Article 40 of this Law, he shall be ordered to dispose of said stocks or securities illegally held according to law. The illegal gains shall be confiscated and a fine of not more than the equivalent value of the securities purchased or sold shall be imposed. In case of a state functionary committing any of the aforementioned acts, administrative sanctions shall also be given according to law. 

Article 188 Where a securities service institution and its practitioners purchase or sell securities in violation of the provisions of Article 42 of this Law, the institution and its practitioners shall be ordered to dispose of the securities illegally held according to law. The illegal gains shall be confiscated and a fine of not more than the value of the securities purchased or sold shall be imposed. 

Article 189 Where any director, supervisor, or member of senior management of a listed company or of a company whose shares are traded on other national securities trading venues approved by the State Council, or a shareholder holding 5% or more of the shares of the aforementioned company purchases or sells the shares or other securities with the nature of equity of the company in violation of the provisions of Article 44 of this Law, he shall be given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. 

Article 190 Where anyone conducts program trading and affects the system security or normal trading order of a stock exchange in violation of the provisions of Article 45 of this Law, he shall be ordered to take corrective measures and be imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. 

Article 191 Where an insider, or a person who have obtained inside information through illegal means engages in insider trading in violation of the provisions of Article 53 of this Law, he shall be ordered to dispose of the securities illegally held according to law, and his illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500, 000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. Where an entity engages in insider trading, the person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. Any functionary of the securities regulatory authority under the State Council who is engaged in insider trading shall be given a severe punishment. 

An entity or individual who engages in transaction by taking advantage of undisclosed information in violation of the provisions of Article 54 of this Law shall be punished in accordance with the preceding paragraph. 

Article 192 Where anyone manipulates the securities market in violation of Article 55 of this Law, he shall be ordered to dispose of the securities illegally held according to law. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. Where an entity manipulates the securities market, the person-in-charge directly responsible and other persons directly responsible shall also be given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. 

Article 193 Where anyone disrupts the securities market by fabricating or disseminating false information or misleading information in violation of the provisions of the first or the third paragraph of Article 56 of this Law, the illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 200,000, a fine of not less than RMB 200,000 but not more than RMB 2 million shall be imposed. 

Anyone who makes false representation or provides misleading information in securities transaction activities in violation of the provisions of the second paragraph of Article 56 of this Law, he shall be ordered to take corrective measures and be imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. In case of a state functionary committing any of the aforementioned acts, administrative sanctions shall also be given according to law. 

Where media or their staff members engaged in reporting on the securities market conduct securities transactions that are in conflict with their duties in violation of the provisions of the third paragraph of Article 56 of this Law, the illegal gains shall be confiscated and a fine of not more than the value of the securities traded shall be imposed. 

Article 194 Where a securities company and its practitioners conduct any act that harms the interests of its customers in violation of the provisions of Article 57 of this Law, the company and its practitioners shall be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 100,000, a fine not less than RMB 100,000 but not more than RMB 1 million shall be imposed. If the circumstances are serious, the relevant permit shall be suspended or revoked. 

Article 195 Where anyone lends his own securities account or borrows others' securities accounts to conduct securities transaction in violation of the provisions of Article 58 of this Law, he shall be ordered to take corrective measures and be given a warning, and may be imposed a fine of not more than RMB 500,000. 

Article 196 Where an acquirer fails to perform its obligations of announcing the acquisition of a listed company and of issuing a tender offer according to provisions of this Law, he shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

An acquirer or its controlling shareholder(s) or actual controller taking advantage of the acquisition of a listed company and causing damages to the target company and its shareholders shall bear compensatory liability according to law. 

Article 197 Where a party bound by disclosure obligation fails to submit the relevant reports or perform its information disclosure obligation in accordance with the provisions of this Law, the party shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. Where a controlling shareholder or the actual controller of an issuer organizes or instructs others to carry out the aforementioned illegal acts or leads to such a situation due to concealing relevant facts, the controlling shareholder or actual controller shall be imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Where the reports submitted or information disclosed by a party bound by disclosure obligation contains false record, misleading representation or major omission, the party shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 1 million but not more than RMB 10 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. Where a controlling shareholder or the actual controller of an issuer organizes or instructs others to carry out the aforementioned illegal acts or leads to such a situation due to concealing relevant facts, the controlling shareholder or actual controller shall be imposed a fine of not less than RMB 1 million but not more than RMB 10 million. The person-in-charge directly responsible and other persons directly responsible shall be imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. 

Article 198 Where a securities company fails to perform its obligation in relation to investor suitability management in violation of the provisions of Article 88 of this Law, or fails to do so as required, it shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not more than RMB 200,000. 

Article 199 Anyone engaged in proxy solicitation in violation of the provisions of Article 90 shall be ordered to take corrective measures, given a warning and may be imposed a fine of not more than RMB 500,000. 

Article 200 Any securities transaction venue illegally established shall be banned by the people's government at or above the county level. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Where a stock exchange allows any non-member to directly participate in the centralized stock transaction in violation of the provisions the Article 105 of this Law, it shall be ordered to take corrective measures and may be imposed a fine of not more than RMB 500,000 concurrently. 

Article 201 Where a securities company, in violation of the provisions of the first paragraph of Article 107 of this Law, fails to verify the information of identification provided by an investor for opening an account, it shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 50,000 but not more than RMB 500,000. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not more than RMB100,000. 

Where a securities company provides an investor's account for others to use in violation of the provisions of the second paragraph of Article 107 of this Law, it shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not more than RMB 200,000. 

Article 202 Where an entity or individual, in violation of the provisions of Article 118 and the first and the fourth paragraphs of Article 120 of this Law, establishes a securities company without authorization, illegally engages in securities businesses, or conducts securities business activities in the name of a securities company without approval, the entity or individual shall be ordered to take corrective measures. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. The securities company established without authorization shall be banned by the securities regulatory authority under the State Council.

Where a securities company offering margin trading and securities lending service in violation of the provisions of the fifth paragraph of Article 120 of this Law, the illegal gains shall be confiscated and a fine of not more than the value of the funds or securities involved shall be imposed. If the circumstances are serious, the company shall be prohibited from offering margin trading and securities lending service for a specified period. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 203 Where an entity defrauds the approval for the establishment of a securities company or the relevant business permits or approval for alteration of major matters by submitting false supporting documents or by other fraudulent means, the relevant business permits or approval thus obtained shall be revoked and a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 204 Where a securities company, in violation of the provisions of Article 122 of this Law, alters its securities business scope or changes major shareholders or the actual controller of the company, or conducts merger, splitting, suspension from business, dissolution or bankruptcy of the company without authorization, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. If the circumstances are serious, relevant business permits shall be revoked concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning, and may be concurrently imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 205 Where a securities company provides financing or guarantee to its shareholders or their associates in violation of the provisions of the second paragraph of Article 123 of this Law, it shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. Where the shareholders are at fault, the securities regulatory authority under the State Council may restrict their shareholders' rights before they have taken corrective measures according to requirements. Where a shareholder refuses to take corrective measures, he may be ordered to transfer the equity holdings of the securities company he holds. 

Article 206 Where a securities company, in violation of the provisions of Article 128 of this Law, fails to adopt effective measures of separation to prevent any conflict of interest or fails to separate relevant businesses but rather mix those operations, it shall be ordered to take corrective measures and be given a warning.  The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. If the circumstances are serious, the relevant business permits shall be revoked concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 207 Where a securities company undertakes proprietary trading in violation of the provisions of Article 129 of this Law, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. If the circumstances are serious, relevant business permits shall be revoked or the company shall be ordered to close down concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 208 Where a securities company incorporates trading settlement funds or securities of its customers into its own assets or misappropriates funds or securities of its customers in violation of the provisions of Article 131 of this Law, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 1 million, a fine of not less than RMB 1 million but not more than RMB 10 million shall be imposed. If the circumstances are serious, relevant business permits shall be revoked or the company shall be ordered to close down concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. 

Article 209 Where a securities company accepts its customers' discretionary order to purchase or sell securities in violation of the provisions of the first paragraph of Article 134 of this Law, or makes any promise on the proceeds generated from securities transaction or on compensating the losses incurred from securities transaction in violation of the provisions of Article 135 of this Law, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. If the circumstances are serious, relevant business permits shall be revoked concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Where a securities company allows any other person to participate directly in a centralized trading of securities in the name of the securities company in violation of the provisions of the second paragraph of Article 134, it shall be ordered to take corrective measures and may be imposed a fine of not more than RMB 500,000 concurrently. 

Article 210 Where a practitioner of a securities company accepts entrustment from customers in private for securities trading in violation of the provisions of Article 136 of this Law, it shall be ordered to take corrective measures and be given a warning. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains, a fine of not more than RMB 500,000 shall be imposed. 

Article 211 Where a securities company or any of its major shareholders or the actual controller fails to report or provide information or materials, or there is false record, misleading representation or major omission in the information or materials reported or provided in violation the provisions of Article 138 of this Law, it shall be ordered to take corrective measures, given a warning and imposed a fine of not more than RMB 1 million. If the circumstances are serious, relevant business permits shall be revoked concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not more than RMB 500,000. 

Article 212 Where a securities registration and clearing institution is established without authorization in violation of the provisions of Article 145 of this Law, it shall be banned by the securities regulatory authority under the State Council. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal gains shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 213 Where a securities investment consultancy institution engages in securities service without authorization in violation of the provisions of the second paragraph of Article 160, or commits any of the acts prescribed in Article 161 in providing securities services, it shall be ordered to take corrective measures. The illegal gains shall be confiscated and a fine of not less than one time but not more than ten times the value of the illegal income shall be imposed. Where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Where an accounting firm, a law firm, or an institution providing asset appraisal, credit rating, financial consultancy, or information technology system service engages in securities services without filing it for the record in violation of the provisions of the second paragraph of Article 160, a fine of not more than RMB 200,000 shall be imposed. 

Where a securities service provider, in violation of the provisions of Article 163 of this Law, fails to act with due care and diligence and there is false record, misleading representation or major omission in the documents it prepared and issued, it shall be ordered to take corrective measures. The business income shall be confiscated and a fine of not less than one time but not more than ten times the value of the business income shall be imposed. Where there is no business income or the business income is less than RMB 500,000, a fine of not less than RMB 500,000 but not more than RMB 5 million shall be imposed. If the circumstances are serious, it shall concurrently be suspended or prohibited from providing securities services. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. 

Article 214 Where an issuer, a securities registration and clearing institution, a securities company or a securities service institution fails to retain relevant documents and materials as required, it shall be ordered to take corrective measures, given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. Where documents and materials are leaked, concealed, forged, tampered or damaged, it shall be given a warning and imposed a fine of not less than RMB 200,000 but not more than RMB 2 million. If the circumstances are serious, it shall be imposed a fine of not less than RMB 500,000 but not more than RMB 5 million. The relevant business permits shall be suspended or revoked, or it shall be prohibited from engaging in the relevant business concurrently. The person-in-charge directly responsible and other persons directly responsible shall be given a warning and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million. 

Article 215 The securities regulatory authority under the State Council shall include the compliance record of relevant market entities with this Law into the integrity archives of the securities market. 

Article 216 Where the securities regulatory authority under the State Council or the department authorized by the State Council is under any of the following circumstances, the person-in-charge directly responsible and other persons directly responsible shall be given administrative sanctions according to law: 

(1) Granting ratification, registration or approval to an application for securities issuance or establishment of a securities company which fails to comply with the provisions of this Law; 

(2) Taking measures such as on-site inspection, investigation and evidence collection, consultation, or freezing or sealing of property, in violation of the provisions of this Law; 

(3) Taking supervisory and administrative measures against relevant institutions or personnel in violation of the provisions of this Law; 

(4) Imposing administrative sanctions on relevant institutions or personnel in violation of the provisions of this Law; and 

(5) Any other failure in performing duties in accordance with this Law. 

Article 217 Where any functionary of the securities regulatory authority under the State Council or of the department authorized by the State Council fails to perform the duties provided for in this Law, abuses his power, neglects his duty, takes advantage of his post to seek illegitimate interests or divulges commercial secrets of the relevant entity or individual to his knowledge, the functionary shall be investigated for legal responsibility according to law. 

Article 218 Where anyone refuses or obstructs a securities regulatory body and its functionaries in performing their duties of supervision, inspection or investigation, he shall be ordered to take corrective measures by the securities regulatory body and imposed a fine of not less than RMB 100,000 but not more than RMB 1 million, and shall be subjected to administrative penalty for public security by the public security organ according to law. 

Article 219 Anyone who violates the provisions of this Law shall be investigated for criminal liability according to law if the violation constitutes a crime. 

Article 220 Where anyone violates the provisions of this Law and is liable for paying civil compensation, fines and penalties, and turning in illegal gains, if his assets are insufficient to make such payments, priority shall be given to making civil compensation. 

Article 221 In serious cases of violation of laws, administrative regulations or the relevant regulations of the securities regulatory authority under the State Council, the securities regulatory authority under the State Council may impose a ban on entering into the securities market upon the relevant responsible persons. 

The ban on entering into the securities market mentioned in the preceding paragraph refers to a system that an individual is prohibited from engaging in securities business, providing securities service, or serving as a director, supervisor, or member of senior management of a securities issuer for a specified time period or for life, or from trading securities on stock exchanges or other national securities trading venues approved by the State Council for a specified time period. 

Article 222 All the fines collected and the illegal gains confiscated in accordance with this Law shall be turned over to the state treasury. 

Article 223 If the party concerned is not satisfied with the penalty decision made by the securities regulatory authority or the department authorized by the State Council, the party may apply for administrative reconsideration according to law, or may bring a lawsuit directly to the people's court according to law. 

Chapter XIV Supplementary Provisions 

Article 224 A domestic company seeking for directly or indirectly issuing securities or listing securities for trading in overseas markets shall comply with the relevant regulations of the State Council. 

Article 225 The specific measures governing the use of foreign currencies in subscribing for and trading of the stocks of the companies listed in the domestic market shall be formulated separately by the State Council. 

Article 226 This Law shall go into effect as of March 1, 2020.